Step-by-step guide to buying property

There is a lot to think about when buying a home. The process can be both exciting and overwhelming. 

Disclaimer: The information contained in this article is of a general nature only and should not be taken as financial or legal advice on any of the topics discussed. Always consult a financial adviser before making any investment decisions.

Identifying what you want in your dream property, understanding home loans and navigating your way through all the paperwork can be challenging. By becoming familiar with these steps and doing some preparation, you can reduce the stress involved in the buying process. 

You should seek expert advice when making a large financial decision to determine if it is right for you. Becoming a home owner gives you the ability to make your house into a home, and it gives you a valuable asset to build equity upon. 

1. Setting your budget

First, decide how much you can afford to spend – keeping in mind all the additional costs associated with buying a home. The largest of these is stamp duty or transfer duty, which varies by state and is generally charged as a percentage of the purchase price.

You can calculate how much you’ll pay in stamp duty on your home here.

In some cases, this amount could be partially offset by First Home Owner Grants (FHOGs) intended to encourage first home buyers to enter the property market. FHOGs also vary from state-to-state and apply mainly to new homes, rather than established properties.

Remember that we have budget planner calculator available to help you create a budget which suits your lifestyle needs.

2. Researching the market 

Once you’ve set your budget and chosen your ideal property, it is important to research the market in the area in which it is located. When you are considering a particular location, look at infrastructure and amenities such as public transport, educational facilities and shopping centres.

Websites that can help with your research include Real Estate and Domain.

3. Choose the right home loan for you and get pre-approval

While searching for your dream home or investment property, it’s a good idea to get pre-approval for your loan from your lender, mortgage broker or one of the many emerging online options. 

Having pre-approval will mean you can move quickly when you find your dream home. You will need to provide employment details including income and expenses, assets and liabilities, and some personal details. 

At Teachers Mutual Bank, we know essential workers are vital to our future, that’s why we’re looking out for theirs. Take a look at our home loans, with great discounts and benefits for you.

4. Inspect the property

Once you have found the home you want to purchase and before you make an offer, you will want to arrange the necessary inspections. You should consider a:

• A building inspection (to check for structural damage) – can vary depending on location $300-$700
• A pest inspection – approximately $200-$500
• Strata title inspection (if you are buying a unit or townhouse under strata laws) – costs may vary from $250-$350. 

You should also consider checking with the local council and state government about zoning issues and future property developments that may affect your home. 

Your solicitor or conveyancer should advise you on what inspections are recommended for the type of property you are buying.

5. Make an offer and securing formal loan approval

Once the inspections have been completed and you are happy to proceed, it’s a good idea to contact your lender or broker to update them on the situation. 

All of your research will assist you when negotiating the purchase price, however you probably don’t want to be too inflexible. It would be unfortunate to lose the property to someone else for an amount that you would have been happy to pay. 

Once your offer has been accepted, a holding deposit of approximately 0.25 per cent needs to be paid. There will be a length of time known as the ‘cooling off period’, which is a set number of business days that is specified in the contract within which you can walk away from the agreement to purchase the property. Typically, the cooling off period will be five to ten business days, although the availability and duration of these periods vary by state. 

You may also be asked to waive your right to a cooling off period, which is often also the case under auction purchase conditions. 

6. Arrange the contract deposit

If you are paying the contract deposit from your own funds, you can generally use a personal cheque or a bank cheque. If part of the contract deposit is coming from your home loan, you may need to use a deposit guarantee (sometimes called a deposit bond). 

This is a substitute for the cash contract deposit and is a guarantee issued by an insurance company to pay the contract deposit to the vendor should you default under the terms of the contract or fail to proceed with the purchase. 

Deposit guarantees can be organised at the same time as your home loan so speak to your lender or broker who will help you to arrange this.

7. Contracts and legal work

Do your research and speak to several real estate agents to find a reputable conveyancer or solicitor that meets your needs. 

You, and the vendor’s conveyancer or solicitor, will check the documentation and begin to draw up the contract for the property transfer. Ask your solicitor or conveyancer to explain the contract so that you understand its contents before signing.

The contract will contain a settlement period which is the length of time before you take legal ownership of the property. This can be negotiated but will need to be agreed to by the vendor before the auction or signing contracts. 

Once all questions have been answered, your conveyancer or solicitor will organise for you and the vendor to sign contracts and pay your contract deposit. The contract deposit is usually placed in the real estate agent’s trust account until settlement.

8. Settlement

Settlement is usually four to six weeks from when contracts are exchanged. This is the date you take legal ownership of your new home. 

Your solicitor or conveyancer will arrange a time and place for settlement to occur with the vendor’s solicitor and any other interested parties, such as your lender. The balance of the purchase price will need to be paid on the day of settlement. Your solicitor or conveyancer will arrange this with your lender who will take the balance of funds to settlement. 

Once settlement has occurred, the vendor’s solicitors will contact the real estate agent who sold you the property and advise them to give you the keys. Your solicitor or conveyancer will also contact you and confirm settlement has taken place. 

You are then the home owner of the property and can enjoy your new home!

Interested in finding out more? 

Our home loan specialists can help you weigh up the pros and cons to help you find the right low-interest home loan for your situation. Book a free home loan health check today, for a no strings attached, no obligation assessment!